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Family Office | High Net Worth Individuals

Proposed Regulations Demand Review of Your Estate Plan

Scott Ditman, CPA/PFS 08.17.2016 | eVisor

Proposed regulations issued by the Treasury Department and IRS on August 2 would significantly limit the ability to use valuation discounts in the context of transferring interests in family-owned entities to family members. This technique has been frequently used to minimize gift and estate taxes. The new regulations would include businesses owned by a family, including real estate operating companies.

The proposals are already facing opposition by tax practitioners, taxpayers, and other advisors who argue that the IRS has overstepped its authority and ignored state law by issuing these regulations.  A public hearing is scheduled for December 1, 2016, and the new valuation rules could potentially go into effect shortly after the hearing concludes.

So what does this mean to you?

1) If you are planning a transaction or are interested in making intra-family gifts and sales to reduce the estate tax payable at death, take action now.

2) If you are not currently planning a transaction, it would be beneficial to review your estate plan with your advisor in light of these proposed regulations. It is critical to evaluate your liquidity needs at death - without the ability to take these valuation discounts, your estate taxes may be higher than anticipated. This review will help you evaluate alternative steps to take. 

Should you have questions about these proposed regulations, contact your Berdon advisor or Scott Ditman, CPA/PFS, Berdon LLP, New York Accountants 

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